USA USA Division of Govenment Entity Accounting Practices


Joined
Jun 28, 2019
Messages
2
Reaction score
0
Country
United States
I am not a trained accountant but I have significant exposure to accounting methods and bookkeeping procedures in commercial venues. (Manufacturing and financial analysis.)

I am researching budgeting practices of a local political subdivision of a state government.

Maybe somebody here could help me with some thorny-for-me questions? If not maybe someone could recommend another forum?

To the point.

The entity starts every budget year from zero even though there is a very significant surpluss from the previous year. This strikes me as the same as retaining earnings in for-profit structures.

First question.
Is this common practice in Local Government accounting? I would think that because such entities do not operate from a profit motive they should be cyclically adjusting their budgets targeting zero gain or loss on a year over year basis?

If this is acceptable standardized accounting practice do the mechanisms for retention or non-retention of surplus have a name? A source method designation in formal accounting standards like GAAP.

If they must be carried over on a year over year basis how are they tagged as a line item from the start in creating a new budget?


Thanks for any thoughts or referrals.
 
Ad

Advertisements

bklynboy

VIP Member
Joined
Oct 12, 2011
Messages
588
Reaction score
110
Country
United States
Yes - common and called zero based budgeting. Has nothing to do with accounting but each department has to justify their budgets each year from the bottom up to secure funding.
 
Ad

Advertisements

Joined
Jun 28, 2019
Messages
2
Reaction score
0
Country
United States
Thanks. That helps.
The organization typically runs about 5% or better under budget each year.
So what typically happens to overage from year to year in such situation?
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top